Table 17-7 The Information in the Table Below Shows the Total Demand

question 256

Multiple Choice

Table 17-7
The information in the table below shows the total demand for internet radio subscriptions in a small urban market. Assume that each company that provides these subscriptions incurs an annual fixed cost of $20,000 (per year) and that the marginal cost of providing an additional subscription is always $16.
-Refer to Table 17-7. Assume there are two internet radio providers that operate in this market. If they are able to collude on the quantity of subscriptions that will be sold and on the price that will be charged for subscriptions, then their agreement will stipulate that

• A)each firm will charge a price of $40 and each firm will sell 3,000 subscriptions.
• B)each firm will charge a price of $40 and each firm will sell 1,500 subscriptions.
• C)each firm will charge a price of $32 and each firm will sell 2,000 subscriptions.
• D)each firm will charge a price of $20 and each firm will sell 3,000 subscriptions.

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Definitions:

Distribution Center

A facility where goods are received, stored, and then distributed to consumers or retail outlets.

New Store

A newly established retail outlet or branch of a business that has recently started operations.

Financial Management

The practice of managing a firm's financial operations to achieve financial goals and profitability.

CFO

Chief Financial Officer, the senior executive responsible for managing the financial actions of a company.